Attached files
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| 8-K - 8-K - RGC RESOURCES INC | a8k1stquarterearningscall-.htm |
Forward-Looking Statements
The statements in this presentation by RGC Resources, Inc. (the "company") that are not historical facts constitute “forward-looking
statements” made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995 that involve risks
and uncertainties. These statements include the company's expectations regarding earnings per share, EBITDA, future expansion
opportunities, natural gas reserves and potential discoverable natural gas reserves, technological advances in natural gas
production, comparison of natural gas consumption and natural gas production, cost of natural gas, including relativity to other fuel
sources, demand for natural gas, possibility of system expansion, general potential for customer growth, relationship of company
with primary regulator, future capital expenditures, current and future economic growth, estimated completion dates for Mountain
Valley Pipeline ("MVP") milestones, potential of MVP to provide additional source of natural gas, additional capacity to meet future
demands, increased capital spending and area expansion opportunity, potential new customers and rate growth in potential
expansion area. Management cautions the reader that these forward-looking statements are only predictions and are subject to a
number of both known and unknown risks and uncertainties, and actual results may differ materially from those expressed or
implied by these forward-looking statements as a result of a number of factors. These factors include, without limitation, financial
challenges affecting expected earnings per share and EBITDA, technical, political or regulatory issues with natural gas exploration,
production or transportation, impact of increased natural gas demand on natural gas price, relative cost of alternative fuel sources,
lower demand for natural gas, regulatory, legal, technical, political or economic issues frustrating system or area expansion,
regulatory, legal, technical, political or economic issues that may affect MVP, delay in completion of MVP, increase in cost to
complete MVP, including by an increase in cost of raw materials or labor to due economic factors or regulatory issues such as
tariffs, economic challenges that may affect the service area generally and customer growth or demand and deterioration of
relationship with primary regulator, and those risk factors described in the company’s most recent Annual Report on Form 10-K
filed with the Securities and Exchange Commission, which is available at www.sec.gov and on the company’s website at
www.rgcresources.com. The statements made in this presentation are based on information available to the company as of the
first day of the month set forth on the cover of this presentation and the company undertakes no obligation to update any of the
forward-looking statements after the date of this presentation.
Non-GAAP Measures: this presentation includes an estimate of Pre Tax Reform Earnings per Share, which is a non-GAAP financial
measure.
2
Agenda
Key Operational and Financial Highlights
2018 Outlook
Questions
3
Key Highlights
Q1 2018 EPS: $0.28
Pre Tax Reform: $0.31
Growth Strategy
Regulated Utility Investment
Customer Growth
Control Operating Expenses
Investments Outside Regulated Utility
4
Roanoke Gas Q1 Capital Expenditures
SAVE
Rider
$2.6
Customer
Growth &
System
Expansion
$1.5
Other
Capital
$1.3 2017
2018
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
$5.0
$5.5
Total Capital Expenditures
M
ill
io
n
s
$0.5 million, or
9% increase in
capital spending
5
Customer Growth
• 205 new customers in Q1 2018
• Consistent customer growth year over year since 2014
58,000
58,500
59,000
59,500
60,000
60,500
2014 2015 2016 2017
Average Customers
(twelve-months ended December 31)
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Industrial and Commercial Growth
RESIDENTIAL COMMERCIAL INDUSTRIAL
VOLUMES SOLD (DTH)
Q1 2017 Q1 2018
Q1 Volume - 2018 vs 2017
• Commercial 14%
• Industrial 8%
• Top 10 Customers 14%
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8
RGCO is a 1% owner of the planned $3.5bn MVP
300 mile, 42” underground natural gas pipeline spanning from
northwestern West Virginia to southern Virginia
Will provide two billion cubic feet (2Bcf) of natural gas per day to
New York, Mid- and South- Atlantic markets
Secured firm commitments for the full capacity of the project
under 20-year contracts
The pipeline will deliver a third source of gas with two interconnects
MVP creates expansion opportunities into Franklin County
Milestone Estimated Completion
FERC approval Issued October 13, 2017
Construction begins Early 2018
Targeted in-service date End 2018
Project Partners (% ownership)
MVP Overview
45.5%
BBB-
10%
A
12.5%
A-
1%
31%
A-
$5
$25
$4
$0
$10
$20
$30
2017A 2018E 2019E
($
m
m
)
MVP capital expenditures
Mountain Valley Pipeline – Project Overview & Timeline
Consolidated Financial Results
For the periods ended December 31,
(Presented in thousands, except per share data)
Fiscal 2018 Fiscal 2017 2017 2016
Gross Margin 9,073$ 9,391$ 32,492$ 32,218$
Equity in Earnings of MVP 149 85 486 216
Other Operating Expenses, net 5,414 5,412 21,278 20,778
Interest Expense 613 459 2,071 1,686
Income Before Taxes 3,195 3,605 9,629 9,970
Income Taxes 1,136 1,373 3,569 3,854
Net Income 2,059$ 2,232$ 6,060$ 6,116$
Basic Earnings Per Share 0.28$ 0.31$ 0.84$ 0.85$
Diluted Earnings Per Share 0.28$ 0.31$ 0.83$ 0.85$
First Quarter Twelve Months Ended
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Consolidated Financial Results
Tax Reform Adjustments
(Presented in thousands, except per share data)
Before Tax Change Final
Revenues 19,218$ (462)$ 18,756$
Cost of Sales 9,683 - 9,683
Gross Margin 9,535 (462) 9,073
Other Expenses, net* 5,878 - 5,878
Income Before Taxes 3,657 (462) 3,195
Income Taxes:
Pre Tax Reform 1,390 - 1,390
Roanoke Gas - (462) (462)
Unregulated Operations - 208 208
Total Income Taxes 1,390 (254) 1,136
Net Income 2,267$ (208)$ 2,059$
* Detailed on previous slide
Basic Earnings Per Share 0.31$ (0.03)$ 0.28$
Diluted Earnings Per Share 0.31$ (0.03)$ 0.28$
First Quarter 2018
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2018 Outlook
Capital Spend
MVP Investment
Earnings
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48%
31%
21%
Roanoke Gas Fiscal 2018
Expenditure Plan
SAVE Rider & Station Replacement $10.0
Customer Growth & System Expansion 6.5
Utility Maintenance 4.5
Total $21.0
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